Card Factory Analysis

Thursday, 31st May 2018 09:45 - by Rajan Dhall

This morning Card Factory released their Q1 trading update:

·      First quarter Group sales growth of +3.0%, with Card Factory like-for-like ("LFL") sales -0.4%, against strong comparatives and in a tough retail environment

·      Continued store roll out with 10 net new stores opened (Q1 FY18: 11); on track for our target of c.50 openings for the full year

·      Strong cash generation with a reduction in net debt since the year end

·      Board's expectations for the full financial year unchanged

This seems to tell a upbeat story and the company look to be performing well. The share price tells a different story, the company currently trades at 218p falling from 358p on the 26th Sept after higher than expected wage costs and foreign exchange movements led half-year profits to fall marginally short of analysts’ expectations.

Ken Hubbard the Co's CEO commented "Overall, Card Factory remains in a strong position as we look forward to the lessening impact of cost headwinds and the benefits of a significant number of business efficiencies being implemented during the year. This will put in place a platform for further growth in the medium term.  The Board's expectations for the full financial year remain unchanged and I look forward to providing further updates as the year progresses."

Looking at the chart I am not expecting a massive move higher but it seems the Company may be putting themselves on the right track and the continued growth and expansion coupled with a reduction in debt is always a good sign.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.